At the time of writing, it’s Christmas eve. The New Year isn’t even upon us, and you might wonder why we’re already mentioning Chinese New Year. But it’s relevant. The holiday season is upon us, and historically the transition from one year to another has been interesting in terms of Bitcoin’s price movement.
Have you ever heard of the ‘calendar effect’?
Wikipedia tells us that a calendar effect is any market anomaly or economic effect which appears to be related to the calendar – e.g. a certain time of the month or year, the time within a presidential cycle, the close of a decade or century, and so forth.
One of the most studied calendar effects would have to be the ‘Holiday Effects’ on stock markets where we often see spikes in trading volumes and high returns immediately prior to major holidays such as Thanksgiving and Christmas.
When it comes to Bitcoin, we know sentiment plays a big role in price discovery, and since its first major rally in 2013, some analysts believe that the price of Bitcoin has consistently been dropping towards the end of each year, only to recover again after Chinese New Year.
But is it really true that the ‘crypto sun sets in the East’? Let’s have a look.
- In December 2013, the price of Bitcoin dropped from $1,150 to $488, only to recover in January 2014 to around $1000.
- In December 2014, spilling into January 2015, the price dropped from $377 to $111, only to recover again later in January, reaching more stability in March.
- 2015-2016 shows no such pattern.
- In January 2017, we do see a drop in the price of Bitcoin from $1185 to $761, coming back to $1200 around the end of February.
- We all know what happened in December 2017: Bitcoin reached its all-time high at $20,000 only to drop quickly after leading to the so-called crypto-winter – lasting throughout 2018.
- In December of that same year, we can see the price drop from around $4000 to $3200 and then a slow recovery from half December 2018 onwards, finally leading us to higher grounds again.
- Now we find ourselves at the end of 2019, and the price of Bitcoin has been hovering around $7,400 for a few days now.
Even looking for it, the data is not particularly convincing.
Nevertheless, thorough technical analysis takes into account more factors than immediate prices alone but also looks at moving averages and other key indicators, and it may be worth delving into the matter.
The reason that we should pay attention to Chinese New Year is that despite China’s cautious stance on crypto, the Chinese market for Bitcoin is among the biggest in the world, and don’t forget that the holiday affects billions of people both socially and financially. And so what happens in China, does not stay in China.
Have a look at this helpful infographic below, to see the logic:
Over the coming weeks, we can expect to see more publications come out that will explore the question of what will happen to Bitcoin as we approach Chinese New Year. But instead of following the hype, we would like to encourage you to do your own research and then anticipate any price movement based on your own findings.
Such analysis should also take into account that 2020 is a particularly special year as it will see Bitcoin’s so-called ‘Halvening’ which is expected to happen in May – this event is also commonly associated with significant price movements.
Unlike before, when it was only a question of whether to sell or buy Bitcoin – depending on your view on the market – now you can trade perpetual futures contracts on AAX instead.
If you expect the price to drop, you can go short, with up to 100x leverage, and if you’re right, this can be highly lucrative. Likewise, if you expect the price to rise, you can go long and with leverage amplify your exposure for greater profits.
Have you tried trading futures yet? Sign up today and make 2020 count!